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Fabergé owner Gemfields draws interest from South African billionaire

Mining updates

One of South African’s richest men has amassed a 12.7 per cent stake in Gemfields, lifting shares in the coloured gemstone specialist that owns the Fabergé jewellery brand to their highest level in more than three years.

The stakebuilding by billionaire businessman Desmond Sacco, who owns mining company Assore, comes after a tough year for Gemfields, which operates the world’s biggest emerald and ruby mines in Zambia and Mozambique respectively.

Gemfields, which is listed in London and Johannesburg, last week reported a return to profit for the first six months 2021 on the back of rising prices and demand for rubies and emeralds.

Sean Gilbertson, Gemfields chief executive, said he had spoken with Sacco’s son Patrick, who in is charge of a new UK-incorporated arm of Assore that has acquired the stake.

“It would appear they have some ambitions of expanding internationally,” said Gilbertson. “They are an astute and well-known mining business and we look forward to building a good relationship.”

Assore declined to comment. Sacco’s net worth in 2018 was around $1.1bn, according to Forbes.

After 70 years on the Johannesburg stock exchange, the Sacco family took Assore private last year. The company’s main asset is Assmang, a manganese mining business it jointly owns with African Rainbow Minerals. It also has interests in chrome and a 25 per cent stake in lithium company Ironridge.

“If they [Assore] are trying to expand it’s easier to do that out of the public eye,” said Yuen Low, analyst at Liberum, a London-based brokerage. “They must see value in Gemfields.” The company currently has a market value of $233m.

Assore started to build its stake this month, initially purchasing 5 per cent of Gemfields from Fidelity International. Further purchases followed and it declared a 12.7 per cent holding last week.

“Our understanding is that Assore intend and wish to build a more meaningful stake in Gemfields,” said Gilbertson, a South African mining engineer by training who took the helm of the company in 2015.

On Friday, South African businessman Christo Wiese resigned from the board of Gemfields. He owns a 13.7 per cent stake in the company, which could now be up for grabs.

Gilbertson said 2020 had been a “truly grisly year” for Gemfields, which was forced to close its mines.

Auction revenue plunged almost 90 per cent punching a $178m hole in its revenues. However, demand for coloured gems has started to pick up and a dearth of inventories is expected to boost market prices.

“There been no new supply produced for the gemstone market . . . and luxury spending has been remarkably strong,” said Gilbertson.

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In results announced last week Gemfields reported pre-tax profit of $38m for the six months to June, against a loss of $66m in the same period a year earlier.

If its auctions in November and December go well, Gilbertson said Gemfields could be back to “normal” annual revenues by the end of the year. Its two mines are now operating again and company hopes to pay a maiden dividend next year.

Asked if the company had any plans to dispose of Fabergé, known for the bejewelled eggs made for the Russian royal family before the 1917 revolution, Gilbertson said it was an integral part of the business

“Right now we find it a very important tool for marketing coloured gems,” he said. “It’s essentially a turbo charger for marketing and promotion.”

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